Daily Currency Update

USD - US Dollar

The USD is weakening as anticipation builds for today’s NFP report. Stocks are up and bond yields are down, which could challenge the USD further. The focus remains on the FOMC outcome and Chair Powell's dovish remarks on future rate adjustments. Today’s US employment data could momentarily shift market attention, although recent trends in NFP data indicate robust hiring, contrary to softer ISM and JOLTS findings mentioned by Powell. With expectations for a 240k job increase in April and a stable unemployment rate of 3.8%, any weaker-than-expected data could reinforce the USD's declining trend. ISM Services data will also be released at 10ET.

CAD - Canadian Dollar

The CAD is underperforming among major currencies today, remaining largely unchanged but still trading slightly below its estimated fair value of 1.3630. Short-term rate spreads continue to pressure the CAD, with no immediate change expected. Yesterday’s Canadian trade data showed a significant drop in March exports, impacting Q1 growth momentum. Canada will release Services and Composite PMI data for April at 9:30ET. Observe the USD/CAD exchange rate.  

EUR - Euro

The EUR is slightly stronger today, despite data showing weaker-than-expected French Industrial and Manufacturing Production for March and stable Eurozone Unemployment at 6.5%. The EUR's strength is partly due to a modest improvement in Eurozone/US yield spreads, with the 2-year gap narrowing by 10bps to -190bps this week. Technical factors are also providing some support.

GBP - British Pound

Sterling is modestly stronger today, supported by slight upward revisions to April's Services and Composite PMI data. UK local elections saw significant losses for the Conservative party, described as potentially their worst in 40 years. The Conservatives also lost a key parliamentary by-election to Labour and narrowly maintained second place. These losses are likely to fuel discussions about a potential change in the Prime Minister and increase Labour's push for a general election, which must occur by January.